Reliance Industries bet on American shale gas has opened our eyes to the potential that exists right in our backyard
For almost a year now, and especially after the aborted acquisition of chemical giant LyondellBasell, the energy market has been waiting for Reliance Industries to make its next move. Sitting on almost $6 billion in cash, India’s largest company by value has been prowling around the world for lucrative opportunities. The company finally made its wager in April. The bet was placed thousands of miles away in south-eastern United States, on a sandstone rock formation called Devonian shale.
“RIL clearly hopes to cut its teeth in the US market which is at the cutting edge of shale gas extraction. The aim is surely to be a big player in this area in India,’’ says a multinational oil company official, who is not authorised to talk to the media. In the 300,000 acres at Marcellus, RIL will start as a financial partner, but the agreements have the provision for it to turn into an operator in some of the acreage over time. This experience will prove invaluable when India is ready to auction its own shale acreage. The Director General of Hydrocarbons is working on an approach paper that is expected to help lay down a policy for auctions of shale blocks. This could be similar to the policy for coal bed methane blocks that are already being given out.
(This story appears in the 16 July, 2010 issue of Forbes India. To visit our Archives, click here.)